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Mortgage Rates Continue to Tumble

The year has kicked things off with some positive signs for the housing market, as Freddie Mac reports that the 30-year fixed-rate mortgage (FRM) dropped for the second consecutive week, hitting 6.15% for the week ending January 19, down 18 basis points from last week’s reading of 6.33%.

Also this week, the 15-year FRM averaged 5.28%, down from last week when it averaged 5.52%. A year ago at this time, the 15-year FRM averaged just 2.79%.

“As inflation continues to moderate, mortgage rates declined again this week,” said Sam Khater, Freddie Mac’s Chief Economist. “Rates are at their lowest level since September of last year, boosting both homebuyer demand and homebuilder sentiment. Declining rates are providing a much-needed boost to the housing market, but the supply of homes remains a persistent concern.”

And as mortgage rates dipped, the Mortgage Bankers Association (MBA) reported a surge in overall mortgage application volume, with app volume up 27.9% week-over-week, according to the MBA’s Weekly Mortgage Applications Survey for the week ending January 13, 2023.

“The people who started browsing homes online and scheduling house tours at the end of 2022 are now turning into actual homebuyers,” said Redfin Deputy Chief Economist Taylor Marr. “Low competition, falling mortgage rates and seller concessions are bringing some buyers back to the market. That’s helping keep national home prices afloat, which is one bright spot for sellers. But many buyers are still sitting on the sidelines and demand could dip back down if inflation declines slower than expected or mortgage rates rise again.”

Redfin also reported that mortgage-purchase apps during the week ending January 13 jumped 25% over the previous week, seasonally adjusted, yet were down 35% from a year earlier. Google searches for “Homes for Sale” were up about 30% from their November low during the week ending January 14, but down about 26% from a year earlier. The median home sale price stood at $350,000, up 0.9% year-over-year

“For people who are thinking about selling their home, current market conditions may be causing them to hold off,” notes Realtor.com Economist Jiayi Xu. “Recent data show that December home sellers faced more competition from other potential sellers, longer time on market, and a greater likelihood of having to lower their asking price. Homeowners looking to sell and buy at the same time, who are likely to have a good rate on their current mortgage, may be hesitant to list their homes for sale and face today’s high mortgage rates and home prices. Some are waiting to see if the market improves before putting their home up for sale.”

Another positive sign for the market comes from the National Association of Home Builders (NAHB), who reports that builder confidence in the market for newly built single-family homes in January rose four points to 35, according to the National Association of Home Builders (NAHB)/Wells Fargo Housing Market Index (HMI).

“It appears the low point for builder sentiment in this cycle was registered in December, even as many builders continue to use a variety of incentives, including price reductions, to bolster sales,” said NAHB Chairman Jerry Konter, a home builder and developer from Savannah, Ga. “The rise in builder sentiment also means that cycle lows for permits and starts are likely near, and a rebound for home building could be underway later in 2023.”

About Author: Eric C. Peck

Eric C. Peck has 20-plus years’ experience covering the mortgage industry, he most recently served as Editor-in-Chief for The Mortgage Press and National Mortgage Professional Magazine. Peck graduated from the New York Institute of Technology where he received his B.A. in Communication Arts/Media. After graduating, he began his professional career with Videography Magazine before landing in the mortgage space. Peck has edited three published books and has served as Copy Editor for Entrepreneur.com.

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